Sources close to the development have suggested that treatment of the site to rid it of the harmful chemical could prove very expensive, while others said the discovery of the contaminant could have implications for the pending Metro North project.

Long before O'Connell Street was the main thoroughfare of the city, the area was best known for the manufacture of bricks and was informally known as brick lane.

According to historians, arsenic was used to colour the bricks dark-red and it is thought that the entire area has similar levels of the toxic substance under the ground.

An Taisce, the national heritage organisation, said that soil contaminated with arsenic must be handled as hazardous waste and any removal of such a substance must be done along strict health and safety guidelines.

A spokeswoman said: "It would depend on the levels, but with high levels any excavated soil would have to be dealt with as hazardous waste and health and safety issues would be to the fore. Obviously there are low levels of arsenic in nature, so it would depend on the concentration."

In a statement to this newspaper, a spokeswoman for O'Reilly's Chartered Land confirmed that arsenic had been found, but insisted it would not derail the project.

"In the course of routine site investigation works, traces of arsenic have been found on the site. But it is important to stress that these are not at levels that are likely to cause any concern in proceeding with the development," the spokeswoman said.

"The survey results are not unusual for a brown field site such as this and we have a clear understanding of the necessary works to be undertaken in respect of dealing with any site contaminants present. The cost of this work is included within existing development budgets," the spokeswoman added.

Metro North is due to go right up the middle of O'Connell Street, with construction due to begin sometime next year.

The Department of Transport said that, while it was unaware of any issue relating to arsenic on the Carlton site, it would of course monitor events and react if new information came to light.

Chartered Land revealed earlier this year that British department store John Lewis is to anchor its O'Connell St development. The company said it expected the project to create up to 3,500 construction jobs and 4,500 permanent jobs when the building work is complete. The project will have a total development investment spend of over €900m and An Bord Pleanala has given the developers seven years, instead of the usual five, to complete the project.

The redevelopment of the former Carlton Cinema site on O'Connell Street was given the green light by An Bord Pleanala in March. The 800,000sq ft scheme is to cover the area between Parnell Street to the north and Henry Street to the south.

The developers had been involved in lengthy discussions with the city council over the project, amid concerns over the height of some of the buildings and for the historical Moore Street, which forms part of the site.

Dundrum Shopping Centre boss Mr O'Reilly was responsible for the building of the new Grand Canal Theatre complex in Dublin's Docklands and also controls the Ilac Shopping Centre. The planning approval came after the developer, Chartered Land, was advised to drop plans for a 13-storey 'Park in the Sky' feature. The revised project will see height limited to around six storeys.